It will invest $90bn to expand and enhance its power network.
The Saudi Electricity & Cogeneration Regulatory Authority (ECRA) has already embarked upon a comprehensive plan to develop the industry to move to a competitive market where supply and demand controls the market process.
The restructuring plan is based on international best practices after studying other countries’ experiences.
Saudi Arabia needs 2000 MW of electricity annually to meet its local demand which requires investments of SR10bn.
Demand for electricity and fresh water is expected to increase by 7% annually.
Saudi Electricity Co. (SEC), has agreed to a SR6bn ($1.6 bn) Islamic loan with a group of six local banks.
Al Rajhi Bank, Banque Saudi Fransi, National Commercial Bank, Samba Financial Group, Saudi British Bank and Saudi Hollandi Bank, will refinance maturing debt and help pay for new projects.
SEC will repay its Murabaha loan over 12 years.
Saudi Electricity spent SR13.5bn on expansion projects last year and approved four new projects last month.
Fitch, the international ratings agency, has upgraded its long term issuer default and senior unsecured ratings of SEC, to ‘AA-’ from ‘A+’ with a stable outlook.
Fitch’s rating is in line with the government’s strong support for SEC.
The new rating will help SEC get financing for its power generation and transmission projects in addition to strengthening its bargaining power with local and international investors.
SEC’s managing board has approved four new projects, including the first phase of Riyadh’s tenth power station with a capacity of 2.000 MW.
The other projects are the expansion of Rabigh station to 720 MW, Al Shuaba station to 1.191 MW and Juba station to 100 MW.
The four said projects will cost SR26bn as part of the SEC strategy to meet growing local demand for electricity.
SEC has also approved five new contracts including the setting up a new transformation stations, connecting west Mecca station and East Madina station with the main network, setting up fuel pipelines for Al Qaseem station, and upgrading the boiler system at Ghazlan station.
The projects will be implemented at a cost of SR1.9bn to enhance the network ability and meet growing local demand for electricity.
Tuesday, July 29- 2008 @ 13:21 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.